A promising deal between enterprise companions within the registered funding advisor M&An area began the place many promising offers do: At an off-the-cuff assembly inside a rustic membership, this one in Mission Viejo, Calif.
Throughout that assembly on Nov. 16, 2023, a younger enterprise developer, Julien Baneux, confirmed Jim DiPisa, an M&A marketing consultant and banker, a software the 2 had beforehand mentioned to analysis and analyze RIA information for patrons and buyers. DiPisa, who had based his M&A consultancy Dalphia Companions earlier that yr, was within the platform, probably as a Dalphia affiliate, based on court docket data that may be filed later.
After subsequent communications, DiPisa ended up with a minority stake and a board seat within the Dallas, Texas-based startup referred to as RIA Progress Catalyst.
Practically two years and a number of lawsuits later, these preliminary conferences have led to a authorized battle that underscores the worth of data-driven insights within the red-hot deal marketplace for RIAs. On the core of the dispute is the comparatively minor sum of $200,000 for a referral payment—peanuts within the multi-billion-dollar RIA deal house. Nevertheless it additionally includes the search to put declare to, and shield, information and proprietary enterprise evaluation, and the scramble to match RIA sellers with usually non-public equity-backed acquirers.
“Information on RIAs is clearly helpful,” mentioned Andrew Besheer, managing principal of Besheer & Associates, who shouldn’t be concerned within the dispute. “It’s additionally comparatively simply accessible—anybody can obtain ADV filings from the SEC. … The RIA Catalyst people are clearly including their very own secret sauce by way of information evaluation and output. I think that the preliminary bar to recreating what they do might be comparatively excessive, ensuing of their output information being fairly helpful to events centered on RIA M&A.”
Baneux, a former enterprise improvement director and marketing consultant for wealth supervisor Certuity, developed the platform from publicly out there information and added proprietary overlays to measure issues corresponding to RIA progress charges and acquisition desirability. The agency publishes information units on LinkedIn to spotlight its capabilities, corresponding to a latest put up unpacking a deal Savant Wealth made for an RIA that scored an 82 out of 100 on the platform’s acquisition rating (thought-about a excessive rating reflecting a stable match between purchaser and vendor).
In later court docket filings, Baneux particulars how he got here up with the thought for the platform and the way a lot time he spent creating it. That included looking for recommendation from, and placing “belief” in, business individuals corresponding to banker DiPisa to assist with the enterprise.
DiPisa disputes that historical past in separate filings, claiming the software program was developed primarily based on his concepts on the RIA market, and was initially to be developed as a Dalphia Companions’ product. Baneux, he argues, created his agency with out looping DiPisa in, solely to later strong-arm him and shoppers for referral charges.
Each agree, by way of the court docket filings, that Baneux initially helped DiPisa determine an RIA that may in the end be bought to mega-RIA Mariner in a deal brokered by Dalphia. From there, agreements on the phrases of what Baneux ought to obtain for that referral and others, in addition to the legality of DiPisa’s use of RIA Progress Catalyst, are actually with district courts in New York and Texas.
Citywire first reported on the court docket filings.
Massive Deal
In keeping with lawsuits filed by DiPisa in New York and Texas district courts, Baneux helped arrange a dialog between Rochester, N.Y.-based RIA Forté Capital and a nationwide wealth supervisor—later recognized as Mariner. (The deal was simply certainly one of dozens introduced weekly within the RIA sector, meriting a temporary point out in a bigger Mariner deal story on WealthManagement.com in August. Mariner shouldn’t be concerned within the authorized dispute.)
In keeping with DiPisa, nonetheless, “significant engagement” over the deal didn’t occur till a later assembly he had at an business convention.
“Baneux performed no position in any of those efforts and supplied no materials contribution to the execution or supply of the advisory engagement,” a grievance filed in New York states.
Even so, based on the grievance, because the deal took form in early June, DiPisa proposed paying Baneux a payment capped at $200,000, or “the lesser of 20%” of the ultimate deal phrases. Later that month, Baneux responded, allegedly calling for an uncapped payment—the potential for the next payout relying on the ultimate deal—and an identical association for different referrals.
After DiPisa rejected that setup and reiterated the capped referral payment, the lawsuit claims Baneux contacted acquirer Mariner in regards to the payment phrases.
“Baneux has tried to stress Dalphia by implying that the transaction might be jeopardized until Dalphia pays an unsubstantiated, uncapped and fully undocumented twenty p.c (20%) payment,” the grievance states.
Within the July 4 grievance filed in New York, DiPisa calls on the court docket to negate any finder’s payment and to maintain Baneux and the agency out of the transaction. He’s represented by his brother, Joseph DiPisa, in that case, who co-founded the legislation agency Yook DiPisa.
In a associated short-term restraining order filed within the district court docket of Texas on July 23 by Dallas legislation agency Parsons Mcentire Mccleary, DiPisa alleges that Baneux, by means of his legal professional, despatched present and potential Dalphia shoppers “Litigation Maintain Letters” relating to the referral payment dispute. DiPisa is looking for damages of $250,000 for the allegedly “disparaging” communications.
Including to the litany of grievances, DiPisa’s Texas grievance additionally particulars alleged misuse of firm funds by Baneux, together with private transferring prices and bills for the legal professional defending him in opposition to the costs. The lawsuit claims Baneux’s actions have introduced RIA Progress Catalyst and BNX Capital, Baneux’s LLC, “into insolvency and positioned it in peril referring to the substantial want of chapter safety.”
No Deal
Baneux responded to DiPisa’s go well with with a 275-page rebuttal in a U.S. district court docket in Dallas on Sept. 2. The rebuttal refuted DiPisa’s allegations and introduced countercharges in opposition to DiPisa and Dalphia, alleging a number of instances of fraud and theft associated to his enterprise.
In keeping with the filings, Baneux developed the platform on his personal time and together with his private sources. He noticed the software as relevant not only for the wealth administration sector however to “present worth … in help of personal fairness investments and mergers and acquisitions.”
Like many entrepreneurs, Baneux sought recommendation on his enterprise thought from business contacts. That’s when he was launched to DiPisa. The lawsuit notes that the 2 mentioned a enterprise case for Dalphia to make use of what would later change into RIA Progress Catalyst, by which Baneux would get a 35% success payment from any transactions.
In keeping with the counter-suit, that payment was later decreased to 25%. Whereas that was by no means solidified, the take care of Dalphia included an open, ongoing referral system for offers that relied on Baneux’s work.
Baneux later arrange the Mariner deal for DiPisa. Nevertheless, based on his declare, he was not paid the suitable referral payment primarily based on their prior conversations. The entrepreneur alleges DiPisa filed the preliminary authorized challenges in New York to pressure Baneux into complicity.
“Dalphia started asserting alleged misconduct by BNX and Mr. Baneux in relation to RIA [Growth Catalyst],” the lawsuit states.
In the meantime, the lawsuit argues that DiPisa was utilizing RIA Progress Catalyst’s information to drum up enterprise in ways in which breached its phrases and circumstances.
“RIA Platform prospects are prohibited from utilizing RIA Platform info in help of enterprise transactions outdoors their companies, corresponding to CIMs (Confidential Info Memorandums) offered to potential purchasers in mergers and acquisitions,” the declare states.
Baneux additionally claims Dalphia used his website data to try to create a separate model, although the grievance doesn’t go into particular element.
“Upon info and perception, Dalphia or Mr. DiPisa has engaged in comparable or competing enterprise enterprise since being allowed to hitch RIA as a member,” the lawsuit states.
Extra broadly, the paperwork filed by his lawyer paint the image of a younger enterprise proprietor looking for to make his approach in an rising market, solely to be bitten by a savvier participant. Along with DiPisa, buyers in RIA Progress Catalyst embody his father, Phillippe Baneux.
“BNX, helmed by a newly minted enterprise proprietor with little expertise negotiating working agreements, believed that Dalphia and Mr. DiPisa had been appearing in good religion towards BNX and towards RIA,” the grievance states. “Having no cause to suspect that Dalphia’s true goal was to amass management over the RIA Platform and RIA’s enterprise enterprise, BNX relied upon Mr. DiPisa’s expertise.”
Baneux is looking for damages from DiPisa, starting from fee for utilizing RIA Progress Catalyst’s information to the bills Baneux and RIA Progress Catalyst have needed to pay to take care of the multi-state litigation.
Shopper Fallout
Brandon Kawal, a accomplice with Advisor Progress Methods who shouldn’t be linked to both celebration and never concerned within the dispute, mentioned the dustup exhibits the promise and perils of a maturing RIA deal house.
“On the optimistic facet, you could have extra advances in know-how—AI, databases and the like which can be on the market, and there are extra instruments out there,” he mentioned. “Nevertheless it additionally presents new areas to navigate, as a result of now we have the identical obligations to in the end shield the consumer.”
Kawal mentioned the dispute, which shouldn’t have an effect on the RIA companies concerned, underscores the necessity for full transparency in dealmaking amongst all of the events on either side.
“For sellers, figuring out what charges you’re paying and to whom and what the preparations are is fairly key,” he mentioned. “That is more than likely essentially the most transformational transaction of your life, and also you don’t need to find yourself going by means of a PR or media battle.”
RIA Progress Catalyst stays energetic within the RIA house, pitching its worth in researching and figuring out acquisition-worthy RIAs. Baneux, who was on his method to an business convention this week, mentioned the agency would “proceed to function and develop regardless of the state of affairs.”
“We hope it will get resolved,” he mentioned. “However we didn’t file the lawsuits—Jim did. They weren’t only a shock to us, however we made efforts to satisfy with and resolve the state of affairs beforehand, and he cancelled the conferences and refused to hitch.”
DiPisa’s Dalphia has not introduced a deal because the Mariner transaction. Nonetheless, his comparatively new agency exhibits a historical past of transactions with massive gamers corresponding to EP Wealth and Cary Avenue Companions. Earlier than beginning his agency, DiPisa had been head of enterprise improvement at Robertson Stephens, a senior vp at Dynasty Monetary Companions, and an equities dealer and analyst at Goldman Sachs, amongst different roles.
DiPisa’s attorneys confirmed that they’re working within the Texas courts to get some or all of Baneux’s allegations dismissed.
They declined to touch upon the authorized proceedings past the court docket filings.
A gathering is about for Oct. 13 in a district court docket in Dallas to set a schedule within the ongoing case.
